A financial institution I bank with has a pretty good money market account offer right now and it got me thinking--1099 indy contractors and small business owners typically pay quarterly taxes on their earnings while as an employee, we have our withholdings pulled out.
I was looking in the forums here and trying to find information about going tax exempt
but alot of folks were talking about waiting until the end of the year to pay taxes.
Leaves room for penalties and audits depending on how much you would owe and if you paid any during the year.
So it got me thinking, what if I went tax exempt, but took out let's say 35-40% of my gross earnings and deposited it into this fluid money market account and just continued to do this with every base and commission paycheck I earned, all the while paying estimated taxes on a quartlerly basis instead of having my employer pull that money out pretax?
theoretically my idea here is that my money can earn interest instead of going straight to the IRS, and I can pay off an estimation and then pay whatever I owe remaining at the end of the year, along with the taxed interest from the money market earnings.
i'm not cpa nor do I have one currently, but has anyone thought of this, tried similar or has a "fuck no" opinion?
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